Most businesses start using bookkeeping services online for one of two reasons - they either want to save money or time. In this article, I want to look at the actual cost of using an online bookkeeper vs. using an in-house bookkeeper. Are the savings really there? The answer is both yes and no. Read on.
How You'll Save Money
When you use bookkeeping services online to support your business, you should be able to save a significant amount of money over paying someone in-house to do it. That being said, you need to make sure you're comparing apples to apples. A lot of business owners use under qualified people to do their bookkeeping. As such, they pass the invoicing, bill payments, and reconciliations off to the secretary. She may be great at her job and highly intelligent, but she's not a trained accountant.
Do you really need a trained accountant to handle your bookkeeping? I can tell you this - you get what you pay for in accounting. If your financials are always wrong and you're not collecting as much as as you should, they your secretary may not be running things as efficiently as you had hoped.
On average, it costs a company around $45,000 a year to hire a trained accountant with a degree. These numbers change of course depending on where you live, be its a good average. Keep in mind that you'll need to pay taxes on that person's wages which get's you closer to $50,000 a year. That means that if you're actually going to hire someone who knows what they are doing, then you're in-house cost will be an average of $4,166 a month.
If you decide to go with bookkeeping services online, then you should be able to cut that cost down quite a bit. At Ignite Spot, our goal is to be 40-60% of the cost while still providing a professionally trained accounting solution. If you compare a firm like us to that kind of cost, then it makes sense from a dollars perspective. However, if you have an untrained person doing it for $8 an hour, finding bookkeeping services online to beat that price will be tricky.
Things to Consider
When you're shopping around, you want to make sure that you're comparing apples to apples. For examples, in this post I'm talking about comparing a company like Ignite Spot to a trained in-house accountant. You'll also want to make sure that whoever you use as your online bookkeeper keeps the work in their firm. Some accounting firms will send the work overseas. One of our largest competitors does this and a lot of their clients come to us because of it. At Ignite Spot, all of our staff work in the same building in Utah. If having a professional accountant that understands U.S. accounting standards and speaks English is important, keep that in mind. Again, you could get the work cheaper, but you may end up working with someone on the other side of the world that speaks very little English.
I believe accounting is the second most important function in any business. The first is sales. After that, it's up to your accounting system to manage the cash so that you're actually generating wealth. With that in mind, make sure you're using a professionally trained accounting team or in-house accountant. Whichever path you choose, just make sure to avoid the cheapest option. You really do get what you pay for.